Granola raised $125 million Series C at a $1.5 billion valuation: Sam Stephenson, Co-founder

0:00Hello and welcome to the Scaling Europe show presented by Deal. Today I've got an amazing guest and some fantastic news. Today I'm joined by Sam Stephenson, co-founder of Brinola, who's got some great news to share. Take it away.

0:12Sam Stephenson:Thank you, Seb. Yeah, thank you for having me. Today's an exciting day. We're announcing our Series C led by Danny Reimer at Index Ventures. We have Kleiner Perkins putting in a check too. So it's so cool for me. These are two people I've looked up to for a long, long time, and to get to work with them is really cool. It's amazing. You don't get more top tier than that, do you? And for those at home,$125 million series seat at a$1.5 billion valuation, becoming the UK and Europe's newest unicorn and newest AI unicorn. So it's amazing news. Congratulations. Thank you. Thank you. Yeah. How does it feel now that you're getting the news out there?

0:53I imagine that the process was probably done a while ago, and now you've been sitting on it getting things ready how does it feel to get it get it out there

0:59Sam Stephenson:i'm i'm i'm yeah i'm really glad we get to talk about it finally like uh there's always a little delay you know there's like the fundraising process there's like making the thing close there's getting all the press releases done and whatever and like um uh i find the fundraiser announcements have always been really helpful for us like it's a moment where people start taking you a bit more seriously as a company and um that it tends to like bear fruit in in enterprise uh deals and things like that like um uh you know your customers will take you more seriously now you've got these backers and this amount of funding behind you um great for hiring too like i think i think um for especially in london like uh we get to we get to be a bigger fish in a smaller smaller pond in san francisco say um and uh yeah so it's it's great for our attention there amazing and why was now the right time i mean you raised your series b i think or you announced your series b may last year so you know in terms of vc windows we're seeing this across the industry more widely but a quite a short window from b to c from i think 40 million you raised last time to 125 million this time yeah why now yeah i think it just um i i guess the the variables in our mind were like i think the space that we're in is moving incredibly quickly like i've never worked in a space that's that's moving so anxiety inducingly fast i know it's just a ton to do on the product side um the thing is also like expensive to run and um and and like i guess having the capital allows us to be to kind of be more aggressive on just like focusing on making granola useful um to people and like uh you know we're still like a revenue uh making company but like um we just get to kind of prioritize user growth and making the product great like you know more so than like i'm going to balance the books immediately today um which i think will cause us to slow down and i think if we slowed down we wouldn't make it right now so yeah just invest in double down on growth itself i think so yeah and we have i mean i mean uh things are looking like the product is growing like really well revenue is growing really well and um uh like i have a lot of faith that you know like uh just with more kind of fuel to we're on the fire we can just make this thing go even faster yeah amazing where's that growth coming from because you've been on this very interesting journey from a sort of like single user tool to a team workspace yeah where are you seeing most of your growth come from is it still individual users who are using it like i've been using it or is it now the growth is taking off within enterprises and i know you've got some amazing clients like uh so like vanter lovable mistral amazing companies are using it but also everybody i know like every vc i know have been raving about granola for years like it's like every vc's favorite tool and actually like i've done a bunch of interviews and i always ask what's your favorite ai tool granola comes up the most commonly out of any tool out there um so yeah like where's the growth coming from yeah i think um we've like granola is a very horizontal horizontally useful tool and so lots of different kinds of people use it.

4:07But I mean, it sounds dumb, but like the people who have the

4:11Sam Stephenson:most meetings are the people that tend to get the most benefit out of granola. And VCs definitely have a lot of meetings, you know, that's, that's, so much of their job is meeting founders and like, you know, having to like decode what the founder's saying and making decisions about it. So they happen to be a very good user for us. And, and I think because of that, we had a lot of VCs and founders of companies as like our earliest beta testers and earliest users. And I think to your question of like, where is the growth coming from? I think having that initial kind of seed group of users who are kind of quite high up in Silicon Valley echelons, you know, like they're very well networked.

4:53Sam Stephenson:They love to talk about the products that they're trying and using. I think it's just meant that we've been able to spread via word of mouth, user to user. incredibly quickly. And it's still to this day, like word of mouth growth dwarfs all of our other growth channels. Yeah, and I think in terms of like where that's happening today, like I think the growth is more spread out now. Like it used to be just among like VCs, founders, really like the early adopters of technology. And I think now we're at a point where like we've spread through the ecosystem enough that like um uh just all kinds of people like in um who work in in and around the tech world i think have heard of on a try and granola right now um and we we basically see like the thing just we like we just have to land like kind of patient zero in a in a company say like a media agency or a um i don't know a tech company or any kind of company we land patient zero granola starts getting talked about among people in the company and and um whether it's like people sharing notes with each other or people someone sees it on on the other person's screen um and they're like what's that and uh yeah so so the thing just kind of naturally grows from there as soon as we land in the company and that's a bit of a is it something like notion or like is it slack maybe that's like the classic go-to-market play because you try and target one person in a company you get enough people in that company using it and then you try and upsell an enterprise contract to get everybody on are you are you seeing that success that's that's most of our sales playbook at the moment yeah is um like we grow because people like the products and uh and then at some point you get enough saturation in the company that like uh that the company it makes sense for the company to get onto to one enterprise contract you know and um and uh yeah so so a lot of our sales kind of processes are like kind of holding people's hand through that through that process and can we talk about that journey that you that you've gone on from being a kind of a single user tool to a team workspace at what point did you realize okay that that was the bigger opportunity that was the thing that you should be chasing yeah i think i mean i think we've always kind of assumed that granola would have to work as a team product across many people um but i think as a tiny startup just trying to make your first thing uh the biggest trap for us would have been trying to do too much too too quickly and not doing a good enough job at just one thing so we were kind of um maniacal about just trying to scope down the problem we were solving to like let's just make really great meeting notes for one person after one meeting and then and then go from there um and yeah so you know i think we've done that and there's more we can do there but i feel good about the notes that Granola writes for you meeting by meeting.

7:48Sam Stephenson:And I mean, we all at Granola, the company, use it internally. And as we've seen it spread within other companies, we have lots and lots of examples and people to talk to about how they're using it as a team. And I think once you've used the product for a little bit, it feels kind of blindingly obvious that, yes, Granola can be helpful to you, the individual, in the moment in your meetings. but there's also this huge power in like having the transcripts of the meetings happening in a company kind of globally accessible to people in the company um like every company right now is trying to figure out how they should use ai to be more productive and to help you know like in the future like you know half of the work of the company is going to be done by ai agents supervised by by humans and and i think a big part of that that like vision is how you know how are those ai is going to be smart enough about what's happening at the company that they're going to do good useful work um and that is all about the context that you give the ai the ai it needs to know what's happening at the company in order to make smart decisions and do a good job um and i think there's like no better context on what's happening in the company than the transcripts of of the conversations happening in that company so yeah i mean a lot of uh a lot of the enterprise like the names of companies you see on our customers list are they're the more forward thinking like ones that are leaning into ai adoption and a lot of the reason they're buying into a pro like granola is to kind of be the context engine that powers all of their internal ai tooling that they're thinking about and in many ways it's a perfect use case for like an llm right because it is about aggregating all of this information and trying to make it accessible to anybody in a very easy way right you have all this context all this information you're breaking it down and you're storing it and you're making it yeah open i want to talk about your your background you know you are a designer by trade and by career which is a it's not completely unusual but it's fairly uncommon co-founder background you know typically it'd be like technical or commercial or whatever how do you think being a founder by being a designer by your I guess training is you know by what you studied by your career has shaped the way that you've kind of founded this company yeah I mean I think um I guess I was a designer my co-founder Chris was a product person before product manager so neither of us was especially technical um I mean I think it shaped the the type of problem that we're taking on with granola to me granola is like all an interface design problem, you know?

10:30Sam Stephenson:Like how do you take this incredible new technology like transcription and LLMs and how do you package it up into a thing that is really easy for an average computer user to understand and use? And there's a lot of clever technology we have to kind of build behind the scenes, but it's all in service of making a great experience. And yeah, I think like there are many startups I wouldn't be well suited to go and doing, but I feel like this is the stuff I love most. Yeah, absolutely. And now talking about deciding what to build and how you build it, how have you made decisions around your product roadmap to date?

11:08Are you analyzing the way that people are using the product itself? Are you talking to your users? When you mentioned before, it sounds like you've always had this grand vision of turning it into a team workspace. So I'm curious to see how much is analytics, how much is interviews, how much is your own vision? Yeah.

11:25Sam Stephenson:Yeah, I would say we definitely do have this kind of lofty, kind of hand-wavy vision of where we might end up and where we might go in the future. On the day-to-day, I'd say it's basically like we talk to a lot of users all the time. Everyone on Steam does. And we do that basically just to kind of build our intuitions about like how people use Granolah, what stuff they understand, what stuff they don't understand. Yeah, we talk to those users and then we kind of make a lot of the decisions honestly based on our gut and like how what how what we think feels best um we uh i mean we have analytics for all the things but we're not a very analytics driven company we we kind of let ourselves be driven a lot by like what feels right to us um and uh yeah it's like a it's a it's a learning curve for some people who've come from more numbersy companies before but we're like super super kind of intuition driven rather than numbers driven that's so interesting it's a very different that's like a really strong cultural aspect i think or like decision to make what does that mean in practice like when it comes to you know lots of people like revolute is a classic example of like incredibly data driven and they always revert to the numbers when you're relying on intuition what does that mean if there's conflict or a tough decision to make what kind of role does intuition play and how does that of shape those conversations?

12:47Sam Stephenson:Yeah, it's a good question.

12:51Sam Stephenson:I think it means a few things. Like, one, when we work on new stuff, the process we try and follow as much as possible is we get a really crappy version of the thing working in our internal version of the app as quickly as possible. And the reason we do that is to make it immediately apparent all of the way that it's bad. Like, when you actually try and use the feature that you're working on for real work, it's usually pretty obvious what's wrong with it and like most people will agree on what's wrong with it and you should just go fix it I think a lot of arguing about like how you should do this feature or that feature is like kind of exacerbated by thinking about things like beforehand in the abstract does that make sense yeah yeah so I think that's a big one and then and then like um uh i guess as as the team gets bigger i think um part of my role and part of my chris my co-founder's role is the kind of we kind of have to play like newspaper editor of the whole the product as a whole you know to make sure that all these individual things we're doing still make sense like as a in this in the in the thing's entirety yeah i got it interesting and now you've been you've been given this you know chunk of money you know it's by no means a small pot of cash to be given 125 billion dollars what are you going to be doing with it you know how are you going to take granola from where it is today to the next stage yeah i think um i think i don't think it changes uh too much i think that there there is um there are dimensions where it can really kind of increase our level of ambition um i think we can be more aggressive about trying very uh uh, kind of compute intensive things in the app where, and like, you know, we can kind of be willing to kind of stomach the cost of that, uh, while we experiment and while we try out early versions of things.

14:44Sam Stephenson:Um, we, uh, we've been kind of ramping up the marketing side of our org for the past six months. Um, and I think Grinola has like a really strong brand among the people that know of it and use it. And I think kind of like capital like pretty directly allows us to kind of help the brand reach more people and therefore convert more people to use granola. And then I think another big thing is we're opening a San Francisco office and hiring a go-to-market team there. And we just had like the initial team of five just started this week. They were all flown into London for a couple of weeks to spend with us.

15:23Sam Stephenson:And yeah, it's really, it's fun to like, I don't know, we'll have another place on the other side of the pond. And I think that's a really exciting opportunity for us to grow there as well. Yeah, that's amazing. That's going to be, yeah, it's going to be really fun. And have you seen lots of people in that part of the world using the product already? So you know that there's like a warm audience there and now you just want to scale it? Yeah, we're like, we're, I think our user base at the moment is really saturated in the tech industry. and um and so like san francisco is the heart of that industry right like uh most of our paying customers are in or around the bay area um just just because of like a function of the fact that our users are in tech mostly at the moment um yeah so it i think having the office there is is great for a bunch of reasons um but the main one i think is we get to be super close to our customers like we'll be able to just go walk a couple blocks down the street and go actually or go spend physical time with them.

16:23Sam Stephenson:Yeah, I'm really excited for that. Yeah, that'd be amazing. Yeah. Are you going to be spending much time out there? I will be spending more time out there. Yeah, yeah. The product and engineering teams are all staying here in London, which is like most of my time is spent on that. But yeah, I think we have great people over there and I think just getting FaceTime with customers will be really helpful. And touching on go-to-market, one of the things that Granola is really well known for is events always hosting co-hosting great events across london what's the rationale behind that it makes me really happy to hear you still there yeah we um uh i think we've always had this belief that like just having interesting people around leads to good things in all kinds of unexpected ways um even even when it was just Chris and me we um it was two of us and we we got a an office to fit eight people um deliberately so that we could have a bunch of friends and people we admired kind of come and use the space with us and and those friends were super you know that we would they'd be the first people we would badger for feedback and um you know there was uh a guy working in NLP research who was like really helpful to bounce our AI ideas off of and um yeah like just just having close proximity to really interesting really smart people is like really helpful and um and so i think that's what motivated a lot of the early events was like how do we now we have a bigger office like how can we scale that up and just have good interesting people coming in every week for for one reason or another um it's it's also been great for hiring like i i think now you know now we've been doing it enough we've kind of built up a bit of a brand for it in the city and engineers especially know about granola maybe more so because of its events than the product um which is just great for for a kind of employer brand and and finding good people in the city interesting so it's been as much about yeah recruited people as anything else it makes perfect sense i mean and and from a visibility perspective i mean i see these events happening online all the time people are posting about them and you do get great people to come and speak at them um we've only got a minute left but i want to finish on the round itself and raising from somebody like danny ramer who is like one of the biggest names in vc in the world was there throughout the the journey of granola has it been do you think easier to raise to some extent because the vcs are so well attuned to the product like i imagine that a lot of the vcs you've raised money from have probably been users initially has that played a role in getting inbound messages and making the process easier or yeah has it impacted it at all yeah i think i think um i think everybody we've raised the major check from as was a user before uh before before we raised yeah i think um it definitely makes like explaining the products easier you know like because we're ultimately a there are a lot of ai meeting note things out there you know and like a lot of what differentiates us is the attention to detail and the product experience which is quite a hard thing to explain in a slide deck when you're pitching an investor cold um so yeah i think i think that's honestly that's a lot of the reason why you know like the understanding the product comes much easier when you've used it yourself and then obviously we have to kind of prove ourselves you know prove that we have potential in all the other aspects of the of the business but um we at least have that thing kind of agreed upon from the beginning and it's a great first impression right it's like i'm going into this potential investment meeting i already really like the product so this is like and and how was raising from index you know you know tier one vc the greatest firm from europe what was that process like i feel very very lucky yeah we like um yeah i don't know we i guess we've kind of been chatting with them on and off for a while and uh um i think as a designer i've always looked up to figma as like one of the great companies that i'd love to build something like and and um i know Daniel was really instrumental from the beginning in Figma's journey.

20:28Sam Stephenson:And so I guess when we started talking, like I think the things that excited us was just how deeply they kind of got what Granola was about, both as a product, but also as a brand. Like not many investors kind of, I think, put enough value on brand and how the thing feels and the squishy stuff, you know? And I think Index really got that. um and then i don't know they're just they're just such well connected people um so well regarded in the industry like i i think i just feel really well like uh like we just have really great backers for all of the new challenges that are going to come ahead of us like this is guinola is like you know i guess i've never run a company before but it's also the biggest team i've ever worked on before like i have so much learning to do about everything that's going to come ahead and so like having smart people like that in our corner is is going to be essential yeah amazing They're going to be amazing partners for the journey.

21:23Everyone who I've spoken to who's raised money from them have said they're phenomenal partners to have. So, look, thank you so much for joining me, Sam. Congratulations to you and the team. It's amazing news.

21:32Sam Stephenson:Thank you, Sam. Thank you. This was fun.